M&A transactions with Middle Eastern targets reach $14.7bn in H1 2013

Thomson Reuters released on 15 July its investment banking analysis for the Middle East region for the first half of 2013.

During the first half of 2013, Middle Eastern investment banking fees reached $356.6mn while equity issuance by Middle Eastern companies raised $3.2bn from 12 issues. According to the report, regional debt issuance reached $26bn during the first half of 2013, a 40% increase over the same period last year.

Russell Haworth, managing director, Middle East & North Africa at Thomson Reuters, said: “The value of announced M&A [mergers and acquisition] transactions with Middle Eastern targets reached $14.7bn during the first half of 2013, 30% up [year on year] from $11.3bn, and marking the best first half since 2008. Bolstered by the $7.5bn merger of two United Arab Emirate (UAE) state-owned aluminium producers, materials was the most targeted industry during the first half, accounting for 64% of activity.”

He added: “The UAE was the most active Middle Eastern country, being both the most targeted and the most acquisitive country in the region so far this year. India was the most popular target for outbound Middle Eastern M&A transactions, while the United States registered the highest value of inbound M&A deals targeting the Middle East.

In respect to Middle Eastern investment banking fees, Haworth pointed out that these fees reached $356.6m during the first half of 2013, a 28% increase over the same period last year ($277.5m), and the best first half for fees in the region since 2010. Completed M&A fees totaled $83.6m, up 56% from the first six months of 2012 ($53.5m), and accounting for 23% of the overall fee pool.

Fees from debt capital markets underwriting in the region hit $102.2m, up 125% from $45.4m during the same period last year, and marking the best first half for DCM fees in the Middle East of all time. Equity capital markets underwriting fees totaled $43.1m, down 35% from the same period last year ($66.7m), while fees from syndicated lending reached $127.6m, up 14% over 2012 and accounting for 36% of the first half fee total.

Deutsche Bank earned the most investment banking fees in the Middle East during the first six months of 2013, a total of $27.4mn for a 7.7% share of the total fee pool. JP Morgan topped both the Middle Eastern completed M&A and the equity capital markets fee league tables. Deutsche Bank took first place in the Middle Eastern DCM fee ranking with a 14% cut, while Mitsubishi UFJ Financial Group topped the syndicated lending fee ranking during the first half.

Haworth noted that equity issuance by Middle Eastern companies raised $3.2bn from 12 issues during the first half of 2013, a 15% decline from the same period in 2012 ($3.7bn), and marking the slowest first half since 2010. Initial public offerings, worth a combined total of $2.0bn, accounted for 63% of ECM activity in the region. Three follow-on offerings totaling $702m accounted for 22%, while convertible issuance accounted for the remaining 15%.

The largest Middle Eastern ECM transaction so far during 2013 was Asiacell Telecommunication’s IPO in February, which raised $1.3bn. Bolstered by this deal, Iraq was the most active nation and telecoms was the most active sector in the Middle East during the first half of 2013. As sole book runner on the Asiacell IPO, Rabee Securities currently leads the H1 2013 Middle Eastern ECM ranking, with 40% of the market.

Haworth concluded: “Middle Eastern debt issuance reached $26.0bn during the first half of 2013, a 40% increase over the same period last year, and the strongest first half in the region on record. Investment grade corporate debt totalled $20.8bn and accounted for 80% of Middle Eastern DCM activity. International Islamic debt issuance reached $16.4bn from 44 issues during the first six months of 2013, an increase of 6% from the same period in 2012. The most active nation for International Islamic debt issuance was Saudi Arabia with 37%, followed by Malaysia with 32%. HSBC took the top spot in the Middle Eastern bond ranking so far this year with a 16% share of the market.”

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